Britain’s leading supermarkets are overhauling construction contracts as part of their relentless drive to cut costs and build faster. At the same time, they are examining ways of tightening their health and safety regimes amid concern that workers will be at risk as contractors battle to hit ever-tighter deadlines.
These were two of the main themes to emerge from a one-day conference entitled “Winning Work in the Food Retail Sector”, organised by Building and sponsored by I-scraper.com, a company offering on-line construction management systems to clients and industry professionals. The UK’s food retailers spend £3bn a year on construction – about 5% of the industry’s total output. The sector is dominated by the “big four” supermarket chains – Tesco, J Sainsbury, Asda and Safeway – three of which were among the speakers at the conference, held at London’s CBI Conference Centre on 16 June.
We may have to stop work at night [if there is concern that the supervision of workers may not be adequate]
Bob Simpson, Asda
As the various heads of construction at the supermarket giants explained, the price war between them means they are under phenomenal pressure to deliver better buildings in less time and for lower cost. Kevin Pleass, Tesco’s operations director, told the 180 delegates that, following a 40% reduction in average development costs from 1992 to 1999, he has been charged with delivering a further 30% reduction between 1999 and 2003. Pleass said Tesco was already on track, having sliced 31% off costs since March 1999. This was done through a “fantastic team effort” between the supermarket and its construction industry partners, and a “zero-based approach to the design of every component” in its standard store. This means suppliers had to ask whether every item was really needed before they specified it.
Pleass ascribed much of Tesco’s success to its use of partnering. Apart from the usual open-book approach to profit and the use of key performance indicators, the supermarket has cut contracts to a single page and eliminated retention moneys. Pleass said of retention: “It’s dated, and offers no real value. You wouldn’t keep back part of an employee’s salary at the end of the year if he did a bad job, would you?”
Retention is dated… you wouldn’t keep back part of an employee’s salary if he did a bad job, would you?
Kevin Pleass, Tesco
Sainsbury, too, has one-page contracts, and is also against retention, as is Asda. Bob Simpson, Asda’s head of development, told delegates:
”We shouldn’t really have retention. We want long-term relationships, and there has to be a degree of trust.” Like Tesco, Asda is targeting its construction performance. Costs have been cut by 25% in the past two years and the company is now building a store in 12 weeks – 15 or 16 is regarded as very good now. “[The construction time] will come down another 10-12% by the end of next year,” Simpson added. Encouragingly, Asda’s performance compares favourably with that of its new parent, Wal-Mart, which manages an average construction time in the USA of seven months. The US giant is seeking to reduce that to five months, which will give it an extra 560 weeks of trading across the group.
Unless we take health and safety seriously we are just waiting for a blue-chip client to have a big accident
Rob Carpenter, J Sainsbury
However, there are fears among clients that the rush to open stores before the paint has dried will lead to more accidents on site. Rob Carpenter, senior construction manager at Sainsbury (which has cut construction time by 40% in the past five years), said: ”Health and safety is absolutely key. Unless we take it seriously, we are just waiting for a blue-chip client to have a big accident, and it will be headline news.” Later, in a question and answer session, Carpenter added that the biggest concerns were over the conversion of stores that remain open during construction, putting contractors cheek by jowl with customers. Sainsbury has launched a series of roadshows to discuss the issue with its construction partners, and Carpenter stressed that the supermarket would accept a contractor’s word that a deadline was not achievable rather than put workers’ safety at risk.
Asda’s Simpson also voiced concern about the risks to workers during refurbishment. In the Q&A, session he said: ”We are going to have a fundamental rethink of our demands,” adding that “we may have to stop work at night” if there is concern that the supervision of workers may not be adequate.